All data has been updated as of 18th Nov, 2022.

As of May 2022, the excise duty on petrol and diesel in India decreased by ₹ 8 per litre and ₹ 6 per litre, respectively.

Want to know the current excise duty the Indian government levies on these fuels?

Keep reading!

As on 4th November 2021, the excise duties on petrol and diesel per litre were ₹ 27.90 and ₹ 21.80, respectively. Following another reduction in May 2022, the excise duty of petrol and diesel got reduced to ₹ 19.90 and ₹ 15.80 per litre, respectively.

The central excise duty constitutes 20% of the petrol price and 17.6% of the price of diesel.

Here is a brief overview of what constitutes excise duty on petrol and diesel, respectively, as of May 2022:

The Government witnesses substantial central excise duties collection from petrol and diesel.

For instance, the central excise duties (including cesses) that the government collected from petrol and diesel during different years are ₹ 2,10,282 crores in 2018-19, ₹ 2,19,750 crores in 2019-20 and ₹ 3,71,908 crores in 2020-21.

The government officially stated that the centre levies such excise duty to collect lump-sum revenue. Accordingly, it allocates these funds for development purposes.

The recent decrease in excise duty on petrol and diesel will have a revenue implication of approximately ₹ 1 trillion for the government. This move is to counter the increasing inflation in the country.

Are you wondering what determines the diesel and petrol excise duty in India?

If yes, take a look at the following factors -

Price of Crude Oil

Government increases excise duty on petrol and diesel when the cost of international crude oil is lower. Alternatively, it lowers the excise duty when the crude oil price is higher.

Financial Emergency

Petrol and diesel are outside the purview of GST. Hence, the Centre can raise excise duties during the arrival of any financial emergency. This may include global recession or healthcare crisis.

For example, the Indian Finance Minister currently stated that the Centre is investing in food grains supply to poor individuals. Additionally, it is also investing in healthcare infrastructure amid this current global healthcare crisis. This is creating a financial burden and hence raising fuel taxes is the only solution.

Demand of Fuels

In case of lower demand for fuels, the Centre looks for an avenue to increase its tax collection to meet regular financial obligations. Hence, levying a higher excise duty relieves it from such a scenario and vice versa.

A surge in excise duty on petrol and diesel has increased the central government's tax collection. However, this has impacted fuel prices in India and raised concerns among Indian citizens. Moreover, the Centre is clear about the non-reduction of excise duty. Hence, the fuel price is unlikely to drop in future.